La-Z-Boy shifts to China

A La-Z-Boy advertisment from the 1970s, the brand will now be produced in Thailand and China.

The La-Z-Boy - New Zealand's most famous and well-loved comfy chair for more than 35 years - will no longer be manufactured in this country.

La-Z-Boy maker Morgan Furniture is closing its Auckland factory, after more than 60 years in business.

The Takapuna company is laying off around 70 staff and shifting its operation to Thailand and China from January 1. It is the third North Shore company to announce major job cuts in as many months.

Founded by carpenter and upholsterer Jack Morgan in 1944, Morgan Furniture joins a long list of New Zealand brands to shift their manufacturing base offshore.

Earlier this year, Sleepyhead and Fisher & Paykel announced they were moving their operations to Thailand and China, with the loss of several hundred jobs.

Meanwhile, local North Shore tape manufacturer 3M is closing its Takapuna plant next year, with the loss of 50 jobs, and bathroomware company Kohler in Glenfield is also scaling down its operation, with around 75 jobs likely to go.

But Morgan Furniture, which began life in disused stables in Northcote during World War II, will be a particularly painful loss.

La-Z-Boy is one of New Zealand's best-known brands and some staff have been with the family firm for up to 40 years.

Board chairman Graham Morgan, son of the founder Jack, broke the news to staff just over a week ago.

"Inevitably, it's sad and upsetting," he said. "We didn't have any choice. Most of them [staff] understand. It was just a matter of time."

The company's New Zealand manufacturing operation has been declining for several years.

It employed 230 manufacturing staff three years ago - now only around 30 administrative staff will remain in Takapuna.

"The market dictates these things," Morgan said. "The costs of manufacturing in New Zealand are significantly greater than in Asia."

He had grave doubts about the long-term viability of manufacturing in New Zealand. "It's impossible to compete," he said.

John Walley, from the New Zealand Manufacturers and Exporters Association, agreed with Morgan.

He said the country's industrial base would be lost unless the Government reined in exchange rate fluctuations. "Nobody is trying particularly hard to keep people here, so we can expect more of it," Walley said.

He predicted more businesses like Morgan Furniture would desert New Zealand in the near future.

"Then what is the economy going to put in its place? The biggest fear is, as you cut back on the top-tier companies, you will lose the pressure to develop industrial capability.

"We will lose the skill base. There will be no one left."

But Gilbert Peterson, of the Employers and Manufacturers Association, took a different view.

"We are going to have substantial changes in manufacturing.

"The challenges presented by countries like China and Vietnam are big but they are not insurmountable. We can flourish again." he said.

Peterson dismissed calls to control exchange rates as "ridiculous". Instead, he called for "sensible policy settings" from the Government, such as reducing company tax.

"We have areas of expertise that other countries just can't match, including specialist skills, value-added products.

"Manufacturing is not going to disappear overnight but it needs to be renewed."